The L.A. City Attorney announced a record-breaking settlement on Thursday in which Wells Fargo Bank was ordered to pay customer restitution and $50 million in civil penalties for opening unauthorized customer accounts.
This agreement is the result of a 2015 lawsuit filed against the bank, in which Wells Fargo is accused of not only starting accounts without customer consent, but failing to notify customers that these accounts had been opened, and causing “negative financial consequences” to customers, including unwanted fees.
“We’re holding Wells Fargo accountable and assuring the violations we’ve alleged never happen in the future,” said L.A. City Attorney Mike Feuer in a statement. “This extraordinary resolution sends a strong message - to big banks and consumers alike - that we’ll be vigilant in protecting consumer rights.”
The City’s investigation into and subsequent lawsuit against Wells Fargo was spurred by an investigative story published by the Los Angeles Times. In the settlement with the bank, the City requires Wells Fargo to submit audit reports every six months for the next two years to prove the bank is complying with the terms of the agreement.
Wells Fargo isn’t just in trouble with the City of L.A. either. The Consumer Financial Protection Bureau and the Office of the Comptroller of the Currency announced legal orders that require the bank make sweeping changes in practice and oversight, in addition to paying hefty financial penalties to the agencies; $100 million and $35 million, respectively.
The CFPB’s investigation found that bank employees opened “hundreds of thousands” of unauthorized deposit accounts and applied for “tens of thousands” of unauthorized credit cards, in addition to transferring funds from customers’ accounts without them knowing and engaging in “improper sales practices” to earn money under the company’s incentive program.
Wells Fargo issued a statement on Thursday in response to the settlements, stating that the bank reached these agreements “in the interest of putting this matter behind us.”
“Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request,” according to the statement.
The bank also emphasized that they were addressing concerns in-house as well, through disciplinary actions, $2.6 million in customer refunds and improved training and monitoring of employees.
Staff reporter Hayley Fox can be reached at email@example.com. Follow @EPfox on Twitter for the latest in L.A. news.